Mr. Chairman, I have overstayed my time. I have another engagement, and must leave. Senator AUSTIN. You have undertaken to send to this committee constructive suggestions with reference to the regulation of interstate commerce; that is, with a view to improvement of the conditions. with respect to monopolies and combinations in restraint of trade. I want to ask you if you do not think it is worth while for your organization to consider a restatement of the existing law; for example, a restatement that will define monopolies. There is no definition of monopoly in the law today. Also a restatement that will set forth the ingredients, the essentials, of the crimes created by the antitrust law. I mean to include in the antitrust laws the Federal Trade Commission Act, the Clayton Act, the Robinson-Patman Act, the MillerTydings Act, and all these laws regulating interstate commerce; to state the definition of crime and, for example, set forth the affirmative side of the antitrust policy of the Government of the United States, something which does not exist in any law we have today, with a view of announcing to business in this particular depression that there is a fair deal for business on the part of the Government of the United States, a deal in which what you may lawfully do appears as clearly as what you may not lawfully do. I ask you whether it would not be worth while for your organization to send us something containing suggestions along these lines. I do not mean to set out a form, or even to indicate the substance, but I join my fellow members on this committee in the belief that business can serve the United States at this particular juncture in a very useful way, and so I ask you if you do not think it is worth while for your organization to make some suggestions along those lines. Mr. HARRINGTON. It is a very comprehensive program that you have outlined. Senator AUSTIN. That leads me to another question. Do you not think, that in order to do such a big undertaking wisely, there ought to be a commission created to make a special study of that subject and do it deliberately, taking time enough, and in the meantime have a moratorium of trust-busting and attacks on business? Mr. HARRINGTON. Yes, I think so. Senator O'MAHONEY. Do you want to still retain the two elements in the last phrase you stated? Do you want a moratorium on trustbusting? I do not think you do. Senator AUSTIN. No, I am not particularly interested in that, but I am interested in the avoidance of the things that cause fear, especially at this time. Senator O'MAHONEY. Mr. Harrington, I would appreciate it if you would tell the members of your organization that there is no disposition on the part of any member of this committee to injure business. We are trying to help business. We appreciate the fact that something must be done, and it can only be done by the Federal Government. We certainly appreciate your cooperation. STATEMENT OF A. P. HAAKE, MANAGING DIRECTOR, NATIONAL ASSOCIATION OF FURNITURE MANUFACTURERS, CHICAGO, ILL. Senator O'MAHONEY. Please state your name and business to the reporter. Mr. HAAKE. My name is A. P. Haake. I am managing director of the National Association of Furniture Manufacturers, with headquarters in Chicago. Senator O'MAHONEY. I observe that is a national association? Mr. HAAKE. That is a national association which extends from New England to California, but does not include the Southeast, particularly North Carolina and Virginia where there is what is known as the Southern Association of Furniture Manufacturers. Senator O'MAHONEY. I laid emphasis upon the word "national,' because we are engaged in a national program. Mr. HAAKE. Yes. Senator O'MAHONEY. You may proceed with your statement. Mr. HAAKE. If you do not mind, I would like to make pretty clear the point of view from which I speak. In the first place, I am not a lawyer. In the second place, while I am employed by the furniture industry and get my salary out of dues, I still nevertheless maintain a somewhat detached attitude. If it may not be interpreted as an oversupply of ego, I look upon myself more as one who is endeavoring to be a guide to the industry, having no funds invested in it myself. And having no fear of what consequences might follow anything I say or do, I find myself in the position of saying to the industry those things which I believe to be in its best interest. We have a board of directors which lays down the policies of the association. That board is open to suggestions from its employees. Therefore, I suppose I could be said to have come here as a disinterested party, perhaps more so than one actively engaged in the business. And in the second place, I am an economist. At one time I taught economics in the university, before I got into business and then really found out what economics is all about. Senator O'MAHONEY. What university? Mr. HAAKE. The University of Wisconsin, where I was head of the department. Since 1923 I have been engaged in active business. Senator O'MAHONEY. You imply that one gets a very different view of the science of economics after engaging actively in business. Mr. HAAKE. Yes. If I were the president of a university I would fire every member of the department of economics and make him work for at least 2 years, and then let him come back and turn him loose on the kids. I say that seriously. One president I know agrees with that view. Senator O'MAHONEY. I think there is something in it. Mr. HAAKE. I am afraid so. Some economists speak very profoundly who have never had to meet a pay roll. There is much that he cannot understand until he sits alongside the desk with a man who is trying to meet pay rolls month by month. So I am looking at this legislation not as an attorney. I am looking at it rather as an economist, particularly one who knows how businessmen react to legislation. So this may or may not be a good measure, legally. I frankly do not know. I am opposed to monopoly, but if I must choose between monopolies, I should prefer those monopolies which build up the highest standards of living to a monopoly on the part of the Government. If, as is sometimes theoretically held, monopoly by government results in the increase of the welfare of the citizens of this country, then I should be for it, on the whole. Senator O'MAHONEY. Will you permit an interruption? Mr. HAAKE. Certainly. Senator O'MAHONEY. I think I should like to explain my point of view. I quite agree with you that a Government monopoly would be unwise. I think you will agree with me that a private monopoly is even more unwise; certainly just as unwise. Mr. HAAKE. Will you permit an interpolation here? Mr. HAAKE. Whether or not it is unwise I do not think should be stated beforehand. It may or may not be, according to how it works out. Senator O'MAHONEY. As between a Government monopoly on the one hand and a private monopoly on the other, there may undoubtedly be a strong preference. Mr. HAAKE. Yes. Senator O'MAHONEY. My concept of this problem is simply this: That to avoid these two extremes it is absolutely necessary that we create the instrumentalities by which commerce is carried on and by properly defining their powers and duties, to avoid the two horns of the dilemma. In other words, by properly regulating the nature of the corporation we may have at once rendered private monopoly impossible and Government monopoly unnecessary. Mr. HAAKE. I agree thoroughly with your objective. Will you pardon me if I suggest to you a very unhappy omission on the part of many people, even in Congress, and certainly on the part of many people generally, which is that they fail to distinguish between objectives and methods. You can take a group of people, even in Congress, and if you draw a sufficiently vivid picture or objective, they are prone to be swept off their feet and take it for granted that the method must be right because the objectives are so splendid. My quarrel is not with the objectives at all. I am only questioning whether this is the proper method to use. Senator O'MAHONEY. You heard the request we made of the previous witness? Mr. HAAKE. Yes. Senator O'MAHONEY. With respect to suggesting a method of dealing with the problem. Mr. HAAKE. Yes. Senator O'MAHONEY. The real purpose of these hearings is to find out how far we should go. Mr. HAAKE. I hope with you, and I may say I am pointed in that direction. I am puzzled to know what monopoly is. It has not been defined. It is neither liberal nor conservative. To a conservative a liberal is someone he does not like, and vice versa. Monopoly, as used by most people, means something undesirable, by which a man has power he should not have, and I do not know what we are talking about when we say "monopoly." Senator AUSTIN. Will you permit an interjection? Senator AUSTIN. I do not know whether you are familiar with Noah Webster's definition of a Federalist as one who loves the Constitution. Mr. HAAKE. There is a subtle irony in that. I do not know whether monopoly is necessarily bad or not, because I do not know what the things are we are talking about. If we are thinking in terms of the one who has absolute power to control the amount of food that we may eat, the amount of clothing that we may wear, who may restrict our activities in any direction in which he can use his power, I could understand that. I would not like it. On the other hand, if we are thinking of monopoly as an aggregation of capital which makes possible mass production and very greatly reduces the cost of goods, or the person who uses that capital for mass production for the most economic production of goods, and is still subject to the control of the consumer, I am frankly not afraid of it. I am not afraid of Henry Ford. I am grateful that I can have in my garage two cars he made of such splendid value. I probably would not have them if Henry had not got enough money together to make them so cheap. He does not control the automobile market. Walter Chrysler and others have something to say about it. As long as he continues to give us more for our money, or make us think he is giving us more for our money, he can stay in business. If he stops giving us that, he goes out of business. That is true even of Henry Ford. Edsel convinced him that he ought to change the design of the car and stop making the Model T. If that is what you call monopoly, I do not think it necessarily bad. We have in our industry two or three large manufacturers. They are pikers in comparison with the automobile industry. If one of them gets a million dollars he is a big fellow. Most of them run around $300,000 a year. One of them at one time ran up to $18,000,000. There was in the industry a good deal of antagonism toward him. It was charged that he controlled the association; that my work was controlled by him; that he would dictate the prices of upholstered furniture, and that he did a lot of other things, all of which was sheer nonsense. could not do anything of the sort. Yet you could have found 50 manufacturers in our industry, if you had asked them if there was monopoly in the furniture industry, who would have said yes. They might have pointed to this man, just because he demonstrated the effectiveness of his competition. He The unhappy thing that monopoly does is to force others to be efficent. People do not like to have to think and change their methods. When this fellow with a big aggregation of capital and brains demonstrated that he was more efficient than the other fellow, then we heard the cry of "monopoly." I am afraid that a good deal of the resentment we find in business against monopoly is nothing more or less than resentment against efficient competition. I should like very much to know just exactly what we are talking about when we talk about monopoly. I have in mind a degree of monopoly by which a monopolist can do things that make the game unfair. That is a crude sort of definition. That is what I do not like. I do not like placing in the hands of a Federal or any other commission, even though I were on that commission, and I have a lot of confidence in myself, such power as this bill proposes. I think a good deal of that confidence I have gained in the furniture industry. If you were to ask me the worst thing that could be done for the furniture industry, I would say give me complete control of it. I would be opposed to placing in the hands of a group of 3, or 5, or 7 men the degree of power this bill places in the hands of the Federal Trade Commission. They are honest men, to be sure; limited in their understanding, necessarily, because of certain limitations in their experience. Their point of view may be unbiased. I am not so sure about that. After all, they have to hold their jobs. They are subject to appointment and perhaps reappointment. I have never known anyone in the employment of the Government who does not temper his acts to the necessities of the situation. Senator O'MAHONEY. You do not imply that is not done outside the Government, do you? Mr. HAAKE. It is done outside, because that is human nature. I am not willing to imply that the Federal Trade Commission, even though made up of the finest people you could find, would be immune. I would be willing to put you and Senator Borah on the Commission, and I do not know of two men for whom I have more respect, and I would not trust you. I would not trust anybody. Senator O'MAHONEY. That is complementary to your statement that the worst thing that could happen to the furniture industry would be to put you in charge of it? Mr. HAAKE. Quite so. That is because of the weaknesses and limitations of the human being. How in the world can a man sitting in Washington, even though he has many reports before him, intelligently and effectively draw a rule, and anticipate possible situations, for the conduct of business? I saw it under the N. R. A. I have been eating crow ever since I did it. I was one of the fellows who stood up in the Mayflower Hotel and appealed for some kind of law to control the situation. I had that dream. I thought it might be possible for a law or a government to make that lunatic fringe behave itself. N. R. A. convinced me that it could not be done. I have seen a perfectly honest individual, operating as a so-called deputy administrator of the N. R. A., one of General Johnson's deputies, perfectly sincere and honest and with all necessary information available to him, nevertheless, he not being engaged in the business, absolutely ruined a section of our industry and threw several hundreds of people out of employment, unnecessarily. He acted honestly. He had before him all the necessary information. I have seen a number of large manufacturers operating under a code who were able, by their deft handling of the deputy administrator, write their own ticket to the disadvantage of a good many small manufacturers. When it comes to the control of an industry through an administrative board, I am far more fearful of the little fellow who is interested than I am of the big fellow. I would not be afraid if I were thinking only of my own business. I would take chances with the rest of them, and I think I could find ways and means of protecting myself under the rules of the game. But here are thousands of these fellows who are not able to do it. I sat in the little-business men's conference a few weeks ago, and last week was with them trying to get them to cooperate in the State of Illinois. Most of them do not know what it is all about. Their own knowledge of the relationship of business to government is pitifully inadequate. They know even less about economics than do the professors of economics. When you ask them to say |